The centre-left Czech government is facing one of its biggest tests since
it was formed at the start of the year with a clear split between the
Social Democrats of Prime Minister Bohuslav Sobotka and his coalition
partners over proposals to extend the life of a coal mine earmarked for
closure. The split and well as media revelations are focusing renewed
attention on the dubious circumstances of the privatization of the OKD
mining company a decade ago. The transaction was pushed through by then
finance minister, Bohuslav Sobotka.

Paskov coal mine, photo: CTK
Finance Minister and ANO party leader Andrej Babiš delivered a clear
‘no’ on Wednesday to plans for the government to offer mining company
OKD
1.1 billion crowns in order for the Paskov coal mine to be kept operating
for a further two years. OKD wants to close the mine employing around
2,000
by the end of this year.

Babiš pointed out that the original deal to sell the state’s share in
the mining company banned the buyer from seeking any help from the
government further down the line. If the government seals a deal with OKD
to prolong mining at Paskov then there could a queue of other companies
asking for cash with the threat of closure and the coal miner itself could
even come back asking for more aid for other mines or the whole company.

Bohuslav Sobotka, photo: CTK
Prime Minister Bohuslav Sobotka reacted by saying that he and industry
minister Jan Mládek would try and talk their government colleagues into
backing the state aid proposal. A renewed memorandum between OKD and the
government to try and seal a deal over the Paskov mine expires at the end
of April.

In spite of the tough words, Babiš did admit that he does not know all
the facts about the negotiations with OKD so far. There might be some more
room for more negotiation and hard coal prices might recover helping to
make the Paskov mine viable again in private hands, he said.

The price of the hard coal OKD produces for sale to heating plants and for
coke for steel production has gone down by around a quarter over the last
year with no sign the slide will stop. The mining company anyway expects
its Czech production to more than halve by 2021.

But the arguments over OKD are not just ideological about whether more
time should be bought for a Czech unemployment blackspot. It also looks
pretty personal with the battle lines also drawn up in the Czech media.

The sale of the Czech state’s near 46 percent stake in OKD has haunted
Sobotka ever since with some analyses saying the 4.4 billion received for
the stake was half and maybe as little as a fifth of its real value.
Sporadic police investigations into the deal have followed.

Andrej Babiš, photo: Filip Jandourek
Czech daily paper Mladá fronta Dnes, now part of Andrej Babiš’ media
empire, has led the pack in its investigations of the OKD deal. On
Thursday
it revealed that Sobotka could have stepped in and halted the flawed deal
in 2006, or demanded billions more in payments, but he preferred to keep
it
on track.

Replies to questions from the European Commission at the time about the
sale were handled not by Sobotka or his ministry but by a friend in a law
firm representing the buyer, Karbon Invest. OKD was later sold on to Czech
financier and businessman Zděnek Bakala, now one of Babiš’main rivals
in the Czech media sector.